On August 14, the US Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) announced they have modified and extended the available safe harbor for taxpayers who capture and store carbon in dedicated saline geologic formations until such time as Treasury provides further guidance or proposed regulations. The notice issued today provides a path forward for the continued election of the Section 45Q tax credit in calendar years 2025 and beyond, allows taxpayers to continue relying on Subpart RR to substantiate volumes of CO2 stored for the purposes of enhanced oil recovery (EOR), and addresses necessary recapture provisions.
This statement may be attributed to Jessie Stolark, Executive Director of the Carbon Capture Coalition, a collaboration of over 70 companies, labor unions, and nonprofits working to build support for carbon management policies.
“We are grateful to Treasury and IRS for providing greater certainty to taxpayers electing the 45Q tax credit with today’s notice and extension of the safe harbor. Long-term certainty regarding Section 45Q eligibility is essential to reaching final investment decisions; even short-term gaps in guidance can create material uncertainty and deter investment. Today’s notice provides important clarity in several areas of the regulations governing the 45Q tax credit.
“Since the EPA announced the potential repeal of the US Greenhouse Gas Reporting Program (GHGRP) last year, the Carbon Capture Coalition has been communicating to the administration and policymakers on both sides of the aisle that the GHGRP serves as the regulatory backbone of the federal Section 45Q tax credit, underpinning the integrity, transparency, and accountability of the program.
“Therefore, EPA’s proposed repeal of the GHGRP created an urgent need for new guidance from the Treasury and IRS on requirements to quantify and verify secure geologic storage to qualify for the Section 45Q tax credit. With this in mind, the Coalition, in collaboration with others in the stakeholder community, proposed pragmatic solutions to the administration that would allow for the continued election of the tax credit in the absence of the GHGRP.
“Today’s issuance of Notice 2026-50 aligns with many of our earlier recommendations and provides critical continuity and long-term certainty to taxpayers conducting all types of permanent geologic storage. While the EPA has long been a key component in verifying amounts of CO2 captured and stored, the safe harbor guidance importantly maintains the integrity of the tax credit through certification by an independent engineer or geologist.
“Specifically, the notice extends the applicability date of the earlier safe harbor, allows EOR operators to continue using the Subpart RR methodology, and addresses important recapture provisions.
“Notably, today’s notice does not address the development, submission, certification, or revision of a Subpart RR monitoring, reporting, and verification (MRV) plan. Subpart RR MRV plans are an important component of the regulatory framework of geologic storage and require monitoring for any potential surface leakage.
“We are pleased to see the Treasury and IRS act with urgency to ensure that the robust reporting elements contained in GHGRP’s Subpart RR are maintained through this safe harbor. We look forward to engaging with the agency to preserve the long-term integrity of these vital reporting mechanisms, which support the further development and deployment of these essential technologies.”
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The Carbon Capture Coalition is a nonpartisan collaboration of companies, unions, conservation and environmental policy organizations, building federal policy support to enable economywide, commercial-scale deployment of carbon capture and storage technologies. This includes carbon capture, removal, transport, reuse, and storage from industrial facilities, power plants, and the ambient air.